Accumulated outstanding balance on mortgage loans rose in February 2023, increasing by 48% from the year before for mortgages held in Spain
In February 2023, the amortized balance of mortgage loans inside Spain grew by a substantial 48 percent compared with February 2022. The total reached 7.2 billion euros, after starting from 4.878 million in the earlier comparison period. These figures come from the data used by iAhorro’s mortgage comparator, which tracks how the balance collected and amortized evolves in the market. Euribor moved back into positive territory in April 2022 after a long stretch in negative values and has hovered near 4 percent since then.
Accumulated outstanding balance on mortgage loans decreased by 1.26 percent
Depreciation data are published monthly by the Bank of Spain and reflect the overall accumulated balance in housing loans across the country. The peak was reached in July 2022. Since then, the balance slid from 519,129 million euros to about 508,477 million euros by February 2023. This accumulated balance captures both new loans signed and the total volume of cancellations or depreciation on mortgages.
Monthly new lending also plays a crucial role. For instance, the National Institute of Statistics (INE) reports 5,148.527 million euros added in February 2023 and 5,340.250 million euros added in January. Looking back further, the February 2023 figure aligns with values seen in July 2022, such as 5,260.008 million euros.
Thus, although the new balance created by new loans has shown a consistent upward trend for years, the accumulated outstanding balance declines due to depreciation. When the February 2023 figure for new inflows (5,148.527 million euros) is added to the January 2023 accumulated balance (510.499 million euros), the total would appear as 515.647 million euros for February. In contrast, the Bank of Spain recorded an accumulated balance of 508,447 million euros, meaning the difference of around 7.2 billion euros corresponds to repayments made in February 2023.
Is now a good time to pay off the mortgage?
Simone Colombelli, director of iAhorro Mortgages, explains that Euribor is the rate at which banks lend to each other. When Euribor is high, money is more valuable to the bank, making early repayment particularly advantageous. Colombelli adds that borrowers can save more on interest by paying off either partially or in full when Euribor is elevated, even though the rate has recently cooled.
Consider a hypothetical scenario: a borrower repays 10,000 euros in May on a 150,000 euro variable loan contracted in May 2019, with a 0.99 percent base rate plus a Euribor spread over 30 years. With current Euribor data around 3.808 percent, the interest savings could reach as high as 7,827.46 euros if the principal is reduced, and up to 23,369.58 euros if the mortgage term is shortened to complete the loan in about three and a half years.
If the same 10,000 euro repayment were made four years after the contract date, but with a Euribor around 0.287 percent (as reported in May 2022), the savings would be notably lower: approximately 1,822.16 euros in interest saved and a reduction in the term by about two and a half years, yielding roughly 3,899.99 euros.
The sooner, the better
Indeed, the key goal is to save money by paying off debt earlier when possible, and to choose the right moment to repay. Colombelli advises prioritizing amortization in the early years of the loan if funds are available. The depreciation framework in Spain follows a French-style system where early years involve paying more interest than principal, while the balance of payments shifts toward principal later in the term. This structure means that reducing the debt earlier can lead to substantially larger savings in interest over the life of the loan. It also means that the accumulated interest savings from shortening the mortgage term can be greater than those from small monthly fee reductions.